Court Questions
SEC Regulation
For Hedge Funds

WASHINGTON -- A Securities and Exchange Commission rule requiring hedge-fund advisers to register with the agency came under sharp questioning Friday from a federal appeals court here.

The rule, which requires most hedge-fund advisers to register before Feb. 1 and undergo routine inspections, is being challenged by a single hedge-fund manager. The SEC, which adopted the rule a year ago on a 3-2 vote, said stricter oversight is needed...